Regional capital markets raised $218.9 million in the third quarter of 2011, up by 23.6 percent from the $177.04 million raised during the same period in 2010, but down 39 percent from the $335.05 million raised in the previous quarter, according to Ernst & Young’s Q3’11 MENA IPO Update.

The sole country in the region to witness any IPO activity in the third quarter of this year is Saudi Arabia with two listings on the Tadawul. United Wire Factories of Saudi Arabia ($88.3 million) was listed in August 2011 and Hail Cement Company ($130.5 million) was listed in September 2011.

“The listings in Saudi Arabia are an exception to the lack of IPO activity in the key MENA capital markets,” says Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young.

“Investors in the region are still uncertain of what fair value is due to the follow-on effect of the EU debt crisis and the slowdown in the US. This is increasingly becoming true for almost all asset classes, including equity and IPO pricing.”

“Companies have had to postpone going to market since 2009 and will continue to do so this year. Investors are again looking for safety as uncertainty is set to continue in the fourth quarter. Predictions of listings, even in the low single digits, may not necessarily hold for the next quarter, however the pipeline of companies waiting for their IPOs is building up,” Phil added.

Global IPO activity down to a halt

Global IPO activity has fallen sharply in Q3’11. So far this quarter, a total of 284 deals raised $28.5 billion, this compares with 383 IPOs worth $65.6 billion for Q2’11 (a 26 percent decrease in number and 57 percent drop in capital raised).

Whereas in Q3’10, there was 302 IPOs which raised $52.5 billion (a 6 percent drop in number and a 46 percent decrease in capital raised compared to Q3 2011). This quarter globally, only 3 deals raised over $1 billion. Average deal size decreased in many markets in Q3’11 compared to Q2’11. The global average deal size was $100 million in Q3’11, compared to Q2’11 ($171 million).

Maria Pinelli, Global Strategic Growth Markets Leader at Ernst & Young comments: “The third quarter results show that the Eurozone and US debt crisis have had a deep impact on the IPO market and on both issuers and investors’ confidence. There are, however, many very good businesses still waiting to go public. Companies have not stopped seeing IPOs as a way of raising capital. They are waiting for markets conditions to improve, while continuing to prepare for their IPO.”

“Asia will continue to lead global IPO activity as domestic and foreign IPO pipeline builds. As soon as the market stabilises, we will start seeing a big wave of IPOs, as there is currently a record amount of about 3,000 companies in the pipeline globally. The dominant trend in Europe’s IPO markets will continue to…